Tax rebates lure auteurs to Gaul

Two-year-old tax program is helping draw foreign filmmakers

A growing number of Hollywood producers are taking a “trip” to France.

Gaul has become friendlier to their projects thanks to its Tax Rebate for Intl. Production. Paradoxically, it comes at a time when more French producers are moving their pics abroad.

In the two years since the introduction of Trip — which is worth 20% of eligible expenditure, capped at €4 million ($5.7 million) — 31 projects have qualified for the support, which has generated $169 million in production spending.

Recent Hollywood pics to take advantage of the incentive have included Martin Scorsese’s “Hugo Cabret” and Woody Allen’s “Midnight in Paris.”

According to Letty Aronson, Allen’s producer, Trip tipped the balance between not shooting the film and eventually shooting it. The filmmakers had wanted to make the pic several years earlier, before Trip was introduced, but decided the production was going to be too expensive.

“We were going to shoot there, and we priced it all out, but it was just too much money,” she says. “But when they passed this law, it really made it possible for us to do the film there.”

Aronson has nothing but praise for the French incentive. “I think they’ve done a good job. From the point of view of a film producer, the more we can get and the more things that could qualify, the better we would all like it. But I do think they have put together a very good law, something that’s easy to qualify for, and a lot of the costs are eligible.”

Line producer John Bernard, who has worked on several Hollywood pics in France, describes the rebate as user-friendly; he now receives a steady stream of calls from Hollywood producers asking him about shooting in the country.

“It has been a massive benefit for production,” he says. “Its arrival has enabled France to become part of that club that you think about when you’re looking for somewhere to put your film.”

The incentive has proved particularly attractive for animation and visual effects work, which makes up half of the total spending, according to Patrick Lamassoure, managing director at Film France.

Yet Trip is not without weaknesses.

Some say the restrictions on eligible expenses are too tight. Some items that can be claimed in rival countries, like security, hotels and U.S. thesps’ fees, cannot be claimed in France, and the amount that is claimable on a European actor’s fee is set at the industry minimum.

Second, in some countries it is possible to combine national support — as is the case with DFFF in Germany — with regional incentives, such as those offered in the Berlin-Brandenburg region. But in France, foreign pics do not receive this regional support unless they are co-productions.

France has another shortcoming: It lacks big-scale studios that can accommodate Hollywood blockbusters.

That will change when the Cite du Cinema complex, Luc Besson’s passion project, opens near Paris next year.

Although the French biz has the support of culture minister Frederic Mitterrand in its attempts to woo Hollywood productions, it would have to persuade finance minister Christine Lagarde if it wanted to increase the rebates. It is unclear whether they could win that battle now, at a time of national belt-tightening.

And some want to boost tax relief for French films, which qualify for a lower rebate capped at €1 million ($1.4 million) vs. the €4 million ($5.7 million) cap for international pics.

Gallic producers can get a better deal shooting in, say, Belgium or Canada as part of a co-production pact, and many are voting with their feet. Last year, the number of shooting days for Gallic pics abroad was up 33% to 1,962, according to numbers from French cinema org CNC.

And according to technicians’ org Ficam, in the second half of 2010, the percentage of the expenditure of French films with a budget of at least $14.2 million that was spent abroad was 67%; in previous years, it has been around 30%.

Producers want to make the list of eligible expenses less restrictive. Producer Philippe Carcassonne, for one, says that due to these restrictions, the 20% rebate ends up being worth about 9%-10% of the budget, whereas in, say, the U.K. or Germany, the equivalent incentives are worth 16%-18% of the budget.

Producers also would like the government to raise the $1.4 million rebate cap to $5.7 million, and to reduce the cultural test criteria for co-productions.

Nonetheless, the number of French films made last year was up 14% to 261, and investment in French films rose 31% to $2.04 billion.

And France has an ace up its sleeve when competing with countries like Belgium or Germany. “They do not have our famous, treasured obligatory broadcasters’ investment system, which makes a huge difference,” Carcassonne says. An average French film can hope to nab 30%-45% of its budget from local TV presales.

“What the French producers are trying to do now is to improve our system where we find our neighbor’s systems better — it’s mostly a tax-credit thing — without losing the advantages of our system,” Carcassonne says.

“That would be the best of all worlds, but we’re not quite there yet.”